Wave function based ab initio and nonlocal density functional calculations employing large basis sets have been performed on the model systems PdCO and PdPH3 in order to investigate the influence of the basis set and electron correlation on properties of the Pd-C and Pd-P metal-ligand bonds. Three relativistic effective core potentials (RECPs) on palladium were combined with various valence basis sets and ligand basis sets, Electron correlation was included using Moller-Plesset methods MPn (n = 2-4), configuration interaction including single and double excitations (CISD), quadratic configuration interaction (QCISD(T)), and coupled-cluster methods (CCSD and CCSD(T)), Full geometry optimizations were performed at all of these levels, and the results were compared to local and nonlocal density functional calculations using the same basis sets. Geometries of reasonable accuracy were obtained using a small-core pseudopotential with double zeta basis sets and polarization functions on the ligands with either the MP2 level of theory or nonlocal density functional theory. The reaction energy for the process Pd-PH3 + CO --> PH3 + Pd-CO was also investigated and found to be less consistent than the geometries : levels of theory lower than CCSD(T) or QCISD(T) gave results which deviated significantly (> 7 kJ/mol) from the values calculated at these levels. Convergence of the reaction energy with increasing basis set size required large basis sets with diffuse functions and polarization functions on the metal and ligands.